PacificSource Health Plans will exit the individual insurance market, as well as cease all operations in Montana, the company confirmed to Becker’s.
“These are not decisions made lightly. We know they will affect people’s coverage and livelihoods, and we recognize the real impact on the individuals and communities we serve,” a spokesperson for the nonprofit insurer said May 22. “The reality is the healthcare system is unsustainable: costs continue to rise, access is inconsistent, and the experience often falls short of what people need and deserve.”
The spokesperson added that the exits will result in layoffs and said it will offer severance to affected employees who qualify. PacificSource, which is partly owned by Portland, Ore.-based Legacy Health, employs more than 1,500 people and has 500,000 members across ACA, employer-sponsored, Medicaid and Medicare Advantage plans in Idaho, Montana, Oregon, and Washington.
PacificSource is one of three insurers that sell plans on Montana’s ACA exchange, one of six in Oregon and one of eight in Idaho. The exits will affect 60,000 people across the three states. The Montana exit will affect roughly 42,000 total members, the Montana State News Bureau reported, including employer-sponsored and Medicare Advantage enrollees. The company told the outlet there will be no coverage changes through the end of 2026.
The announcement comes two days after Portland-based Providence Health Plan said it would shutter most of its insurance business beginning in 2027, affecting 440,000 members predominantly in Oregon. Providence offers ACA, employer-sponsored, Medicaid and Medicare Advantage coverage, and cited many of the same pressures as PacificSource, saying larger insurers have consolidated significantly, leaving regional not-for-profit plans in “an untenable situation.”
PacificSource has faced mounting financial strain across its operations. The insurer largely withdrew from Washington state in 2024, citing provider consolidation and the high cost of competing in that market. In October 2025, the company laid off roughly 300 employees, attributing the cuts to rising healthcare costs and Medicaid funding challenges. PacificSource had also dropped its Medicaid contract in Lane County, Ore., earlier in 2025, a move that affected 100,000 enrollees.
In May 2025, AM Best placed PacificSource’s financial strength rating under review with negative implications, citing continued pressure on its government business, earnings volatility and capital declines, including a premium deficiency reserve of nearly $75 million booked for 2025. The rating agency also said that Legacy Health had no immediate plans to provide capital support to the insurer despite recent losses. AM Best withdrew the ratings in October at PacificSource’s request, at which point it assessed the company’s balance sheet strength as weak and its risk-adjusted capitalization as very weak, even after some earnings improvement and $25 million in capital contributions from its holding company.
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